Teaching dollars and sense

Salem High School has graduated some otherwise well-educated and well-rounded seniors who weren’t capable of deciphering their first paycheck or of understanding the pitfalls of the credit card come-ons popping up in their mailboxes.

Until recently, Salem was no different than most high schools across Virginia or the United States. Then the school board decided that every student needs a crash course in personal finance before being eligible to receive a diploma.

In the academic world, it’s called financial literacy. In the real world, where knowledge about the rules of cosign come in more handy than the cosine rule, it’s called staying out of trouble. The better equipped teens are in understanding how money works, the better prepared they will be in young adulthood to head off financial disasters.

Economic principles have long been taught in high schools, but they haven’t been mandatory.

There is an acknowledgment at both the federal and state levels that public schools need to teach students at least the basics about taxes, investments, credit and such.

Virginia in 2005 established financial literacy goals for middle and high school students, but as to how they will be taught and applied is still under development.

The Salem School System isn’t waiting. It is the first in what hopefully will become a quickly growing list of schools to require a semester-long personal finance course as a graduation requirement.

At the start of the course, students take a pretest to determine what they already know. Most fail. By the end of the course, most students can earn at minimum a C-plus on the test.

It’s a good start as long as students also learn that this course is really just a beginner’s primer.

Far too many adults don’t understand how markets or budgets work or about filing taxes, applying for credit and building savings; they take out mortgages and loans with negative amortization or sharply increasing payments that they don’t understand at the outset; they borrow much more than they can realistically pay or turn to payday lenders to make ends meet.

The personal bankruptcy courts are full of people who at young ages became trapped in debt because they didn’t understand what they were doing.